The Pound South African Rand (GBP/ZAR) exchange rate enjoyed a strong relief rally last week, amidst easing concerns over another Scottish independence referendum.
What’s Been Happening: Pound South African Rand Jumps as Fears of Indyref2 fade
The Pound got off to a strong start last week, as GBP investors were relieved to learn that Scottish National Party (SNP) failed to secure an outright majority in the previous week’s elections, greatly diminishing the chances of another independence referendum.
Sterling then maintained this upward trajectory as Boris Johnson confirmed more of the UK economy would be allowed to reopen from 17 May, and the UK’s latest GDP figures revealed that growth contracted at a slower pace than expected in the first quarter.
The uptick in the GBP/ZAR exchange rate was tempered in the latter half of the week however, after Johnson refused to rule out reintroducing regional coronavirus restrictions in the future.
Meanwhile, the South African Rand was able to temper its losses against the Pound at the start of last week amidst relief that credit ratings agency, Moody’s, didn’t further downgrade South Africa’s credit rating from ‘junk’ status.
However, the Rand faced more pressure in the latter half of the week as market sentiment was sapped by global inflation concerns and rising tensions in the Middle East.
Three Things to Watch Out for This Week
- UK Data
A slew of high-impact data could provide the Pound a major boost this week, with strong inflation and PMI figures in particular likely to be supportive of Sterling if they print positively.
- Coronavirus Headlines
GBP investors will also be keeping an eye on coronavirus developments in the UK, amidst fears the spread of the Indian variant could force the government to alter its roadmap for reopening the economy.
- SARB Rate Decision
Meanwhile the spotlight for ZAR investors will be on the South African Reserve Bank’s (SARB) latest rate decision. No policy changes are expected this month, but will any hints at tightening its policy later in the year lift the Rand?
Pound South African Rand Forecast
Looking ahead, the Pound South African Rand exchange rate could extend its recovery this week, if UK economic data manages to impress.